Finding new impact opportunities in urban investment data

Data reveals opportunities and paths yet unseen, so Danielle Salah and her colleagues at HIPInvestor spend a lot of time thinking about it: how to measure, map and analyse more effectively across asset classes and investment themes. The data from their municipal bond ratings tell a particularly interesting gender story. 

At HIP Investor, our unique methodology of almost 30 ,000 impact ratings rates and rank all types of investments according to their net impact on society across our five pillars of Health, Wealth, Earth, Equality and Trust. Our quantitative analysis of fundamentals systematically captures metrics from operational outcomes, products and services, and management practices.

In 2012, we started looking at bonds more closely. When looking at the 24,500 bond issuers using criteria that are material to each sector, we look beyond their ability to return principal and interest, because we believe they can also serve to build a better world. We evaluate 'net impact' so that investors can see precisely how and where an issuer is generating its impact.

The HIP Ratings for municipal government issuers – cities, counties, and states which focus on the Health, Wealth, Earth, and Equality outcomes were particularly interesting from a gender perspective. Governments with higher HIP Ratings generally have healthier citizens with access to the resources they need to live a high quality of life. Across the HIP pillars, this is measured in several ways: in Health, lower obesity rates and higher health care coverage; in Wealth, more affordable and livable communities; in Earth, the type and intensity of commuting to work; and in Equality, the share of ethnic and gender entrepreneurs and business owners.

And when drilling down on the Equality pillar by looking at the relationship between some of the underlying metrics, we began to see interesting trends. For municipal governments, analyzing the share of women owned businesses versus median household income reveals new opportunities for impact investing. The cities of Detroit, Memphis, and Baltimore, all in the low income range in Figure 1, are leaders in the percentage of businesses owned by women. In Detroit, more than 62% of businesses are women-owned – significantly higher than the 50% representation that most cities struggle to attain, and the national average of 30%.

Figure 1

Particularly in communities of lower income, these female entrepreneurs are often serving vital needs in their communities, and cities of successful small business owners create strong, resilient local economies. In becoming entrepreneurs, there are different challenges that women uniquely face, many of which are only amplified when they are women of color, but access to financial capital tends to be the most critical challenge. More targeted gender-lens investing in communities where female entrepreneurs represent a significant portion of small business ownership can help these women access the capital they need to grow their businesses and be successful at scale, bringing financial vitality and resilience to their neighborhoods and communities.

We’re thrilled that Women Effect has been listening for potential investment vehicles and initiatives that are explicit in the desire to serve women and communities of colour. If you're interested in learning more check out the websites of Backstage Capital, Alight Fund, NOW Ventures, Village Capital and the Harriet Angels by Maya Venture Partners.

image credit: WOC in Tech Chat on Flickr